Mustafa Limited began operations on January 2 2010 The

company #1200
Mustafa Limited began operations on January 2, 2010. The company employs nine individuals
who work eight-hour days and are paid hourly. Each employee earns 10 paid vacation days and
six paid sick days annually. Vacation days may be taken after January 15 of the year following
the year in which they are earned. Sick days may be taken as soon as they are earned; unused
sick days accumulate. Additional information is as follows:Mustafa Limited has chosen to accrue
the cost of compensated absences at rates of pay in effect during the period when they are
earned and to accrue sick pay when it is earned.Instructions (a) Prepare the journal entry(ies) to
record the transactions related to vacation entitlement during 2010 and 2011.(b) Prepare the
journal entry(ies) to record the transactions related to sick days during 2010 and 2011.(c)
Calculate the amounts of any liability for vacation pay and sick days that should be reported on
the balance sheet at December 31, 2010 and 2011.(d) How would your answers to parts (b) and
(c) change if the entitlement to sick days did not accumulate?View Solution:
Mustafa Limited began operations on January 2 2010 The company

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